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B1 Structure and organisation
• Organisational structure, e.g. hierarchical, flat, matrix, holacratic.
• Functional/operational areas, e.g. human resources, research and development, sales, marketing, purchasing, production and quality, finance, customer service, IT, administration.
Class Learning Activity: Are all businesses organisational structure the same?
Why does any business or team need a structure?
Hierarchial Structure
Hierarchial Structure
Flat Structure
Matrix Structure
Holacratic Structure
Organisation Structure
Organisation Structure
Organisational structure is like the blueprint that shows how a company is set up and who reports to whom. It's a bit like understanding who's in charge and how different people fit into the business. Organisations need a structure to enable the business to operate effectively. As a business grows, the structure may evolve but needs to be considered carefully so that:
All jobs that need doing are identified and allocated
Lines of communication are established
Levels of responsibility are identified and allocated
Levels of authority are attributed
Even a sole trader will need to have a structure so the necessary jobs get done. Examples include:
Keeping the accounts
Ordering Supplies
Promoting the Business
Therefore some jobs are likely to be outsourced (Paying an expert external with the required expertise to carry out a job). In a way this expert could be seen as part of the structure, as the sole trader will depend on them for the smooth operation of the business.
Hierarchical Structure: This is when a company has different levels, like a pyramid. The top level has the highest-ranking people who make big decisions, and the levels below have more people with less authority. For example, think of a school with a principal at the top, then vice-principals, teachers, and students below. This type of structure is easy to understand. There is one person with overall responsibility and authority for the business and everyone else has a clear position in the organisation. It shows the one person with the overall responsibility and authority for the business and everyone else has a clear responsibility. Each manager leads a team of employees and in large organisations these teams might also have leaders. The owner has overall authority and responsibility and this can impact on the length of time it takes decisions to be made.
Flat Structure: Here, the company has fewer levels. People might work more closely together, and decisions can be made faster as there is less bureaucracy (red tape) . Imagine a small family business where everyone works side by side, from the owner to the employees. Although with one leader they are likely to be more protective and reluctant to change. As the business grows the structure may need to be changed.
Many micro businesses or possibly even some larger businesses might have this type of structure. The lines of responsibility are very clear and the routes to those in authority are also clearly defined. As the business grows the number of subordinates may become a problem. Promotions and progression can also be limited which might affect staff morale. The structure may need to change as the business grows.
Matrix Structure: This is like a mix of different structures. People have two bosses – one from their department and one from a project team. It's like having two teams you're a part of. For instance, you might work in the marketing department but also help with a special project led by another team. This brings together teams of different people to work together on projects a bit like players from different clubs coming together to play for their country in the World Cup.
Holacratic Structure: This is a bit different. It's like a network where teams work together but each team has a lot of freedom to make decisions. Imagine a group of friends planning a camping trip together. Each person suggests what to bring and where to go. Responsibility and authority are distributed amongst the work force. Clear roles, objectives and aims replace authority and responsibility, this requires trust and good communication. Holacracy claims to remove the problem of bureaucracy. The advantage of this type of structure is the equal distribution of responsibility and suthority. No single figure takes the role of boss and everyone can operate autonomously. This can help a business to adapt to change quickly and may provide employees with better job satisfaction as they feel more empowered and part of the business. This structure can help businesses adapt quickly to change and generate greater job satisfaction.
Class Learning Activity: If you were the owner of a small business what organisational structure would you use?
Does the size of the business matter when deciding the organisational structure?
Class Learning Activity:Why does a business have different departments? What departments might we find in a large business? Would a small business have the same departments.
Functional/operational Areas
Functional/operational Areas
Functional or operational areas are like the different "departments" within a company. Each area handles a specific type of work that's important for the business to run smoothly.
Human Resources: These are the people who take care of hiring new employees, managing salaries, and making sure everyone's happy at work.
Research and Development: This team comes up with new ideas for products or ways to improve existing ones. Think of a company that designs new video games.
Sales and Marketing: These folks help sell the company's products or services. They might create ads, talk to customers, and convince people to buy.
Purchasing: This area is responsible for buying the materials and things the company needs to work. For example, a car company's purchasing department might buy metal and tires.
Production and Quality: They're in charge of making the products. If a bakery bakes and checks if the bread is fresh and tasty, that's production and quality.
Finance: This team handles the money. They make budgets, pay bills, and keep track of how much the company earns and spends.
Customer Service: If you ever call a company with a problem or a question, you're talking to the customer service department. They help customers have a good experience.
IT (Information Technology): They take care of the computers, software, and tech stuff that the company uses. If your computer at work has a problem, IT helps fix it.
Administration: This is like the behind-the-scenes group that keeps everything organised. They might handle scheduling, paperwork, and other important tasks relating to pay.
Remember, just like in a big puzzle, each piece (functional area) has its special role, and when they work together smoothly, the whole picture (business) comes together.
In large companies these departments may be clearly visible however they also exist in a smaller and less formal scale in small businesses. For example, a hairdressing salon will still purchase stock, deal with finance and administration, and need HR for formal matters, but it is less likely to undertake research and development functions in the way large businesses do. They may however contribute to the R & D of their suppliers by giving feedback. All employees need to have a good understanding of the day-to-day issues the business faces and often interact closely with the customers frequently.
Operations
If the functional areas are not structured effectively operations will not run efficiently. Companies who set up customer service representatives off shore often get complaints from customers due to lack of understanding and poor service. Shortages in certain areas can also lead to frustrations when a customer is dealing with a company.
Some reductions in staff are possible due to advances in technology and can be implemented with little or no effect on the service provided, they might even possibly improve it.
Class Learning Activity:
In groups of 3 discuss how your allocated functional area contributes to the success of a business of your choice.
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